Online Safety Bill to include paid-for scam ads

In an amendment to the draft Online Safety Bill, published today (March 9), search engines and platforms which host user-generated content, video-sharing or live streaming will have a duty of care to protect users from fraud committed by other users.

These companies will be required to prevent paid-for fraud ads on their platforms, whether or not the ads are controlled by the platform itself or an advertising intermediary.

The amendment comes after pressure from a coalition of consumer groups, charities and financial services industry bodies, who have been calling for the government to increase the scope of the bill to include paid-for adverts.

Pimfa, the Investment Association, Which? and UK Finance, among others, warned the government on July 21, that its approach to tackling online fraud was “flawed”. 

For far too long, scammers have been allowed to operate with impunity in an online world in which consumers have few protections.Debbie Barton

Nadine Dorries, the culture secretary, said the government has “heard the calls” to strengthen the new internet safety laws.

“As technology revolutionises more and more of our lives the law must keep up,” she said. 

“[These rules will] make sure industry practices are accountable, transparent and ethical - so people can trust what they see advertised and know fact from fiction.”

Industry welcomes move

The move has been widely welcomed, with Debbie Barton, financial crime prevention expert at Quilter, saying the company is “thrilled” by the news.

She said: “For far too long, scammers have been allowed to operate with impunity in an online world in which consumers have few protections.”

She added that previously the government wanted to include user-generated scams but not paid-for adverts, but this “wouldn’t have been enough”.

“In fact, it would have encouraged scammers to just pay for an advert to avoid the new legislation. 

“The bill will ensure that technology companies face a new legal duty to tackle harm caused as a result of fraudulent content on their platforms.”

Pimfa said bringing such adverts within scope of the Online Safety Bill could "wipe out online fraud and the practice of cloned website".

Liz Field, chief executive of Pimfa, said: “In May, the government conceded our point about user-generated content and included such content within the scope of the Online Safety Bill. Today, it has once again accepted our argument, and that of the Financial Conduct Authority, Financial Services Compensation Scheme, Bank of England, and the Treasury Select Committee among a host of MPs and others, that paid-for online adverts be included within the scope of the Bill.

“Of course, we will wait to see the detail in the Bill. But we are delighted to see the government has seen sense and is willing to act to save thousands of people from the threat of fraud, which is after all, the widest reported crime in the UK today.”  

Phil Brown, director of policy at B&CE, provider of The People’s Pension, said the amendments are a “huge step forward” in the battle against “ruthless criminals”.

“This is great news for all consumers but law makers and partner agencies must continue to remain one step ahead of fraudsters," he said.

The government has also launched a consultation on proposals to tighten the rules for the online advertising industry. This includes tougher rules and sanctions for harmful or misleading adverts, or those for illegal activities such as weapons sales.

Influencers failing to declare they have been paid to promote products on social media platforms could also be subject to stronger penalties.

Research by consumer group Which earlier this year estimated that 9mn people have been targeted by online scams.

The research found that four in 10 (43 per cent) of 2,119 consumers were dissatisfied with the protection from scams provided by social media platforms and search engines, more than double (20 per cent) the number who felt protected.

The research also showed that an increasing number of scams have surfaced amid the Covid pandemic, with 79 per cent of people having been targeted and 9 per cent falling prey to social media scams. 

This follows figures from the Office for National Statistics, which highlighted the increase in scams by 36 per cent when compared to pre pandemic levels.

sally.hickey@ft.com